Boston condo buyers beware of this, mortgage fees are changing next month

Mortgage fees are changing for homebuyers next month. Here’s what you should know.

If you’re looking to buy a Boston condo, be aware that mortgages will change next month.

Starting May 1, upfront fees for loans backed by Fannie Mae and Freddie Mac will be adjusted because of changes in the Loan Level Price Adjustments (LLPAs), the fees that vary from borrower to borrower based on their credit scores, downpaymenets, types of home, and more. The changes relate to credit scores and downpayment sizes.

In some cases, people with higher credit scores may end up paying more while those with lower credit scores will pay less.

Scoring higher: Applying for a mortgage? How to improve your credit score and save when buying a house

What are the fee changes?

The entire matrix of fees based on credit score and downpayment has been updated. If you have a top credit score, you’ll still pay less than if you have a low credit score. However, the penalty now for having a lower credit score will be smaller than it was before May 1.

For example, if you have a score of 659 and are borrowing 75% of the home’s value, you’ll pay a fee equal to 1.5% of the loan balance.  Before these changes, you would have paid a 2.75% fee.  On a hypothetical $300,000 loan, that’s a difference of $3,750 in closing costs.

On the other end, if you have a credit score of 740 or higher, you would have paid a 0.25% fee on a loan for 75% of your home value before May 1. After that date, you could pay as much as 0.375%.

Source: Yahoo News – Read More


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